Jennifer,

I wholeheartedly support this. Can council discuss this at our next meeting?

Don Frantz

Cary Town Council

District B

919-612-6870

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To: Council@townofcary.org

Subject: Distribution Formulas for Food and Beverage Tax and Occupancy Tax Revenue

From: Jennifer.Robinson@townofcary.org

Date: Fri, 8 Aug 2008 13:13:23 -0400

Hi all,

I would like to begin the process of having our staff assist the Council in working with the City of Raleigh, Wake County, and our State legislators to redefine the distribution formula for the Food and Beverage tax and the Occupancy tax. I am asking that we initiate this effort at this time because a series of discussions must occur before consideration of this issue is ultimately included in our 2009 Legislative Agenda next Spring. Please let me know if you support having the Council consider this initiative under Old/New Business at one of our upcoming Council meetings.

History

Before 1991, the Town of Cary had its own Occupancy tax. In 1991, when the County sought and was granted authority from the State to levy two separate taxes (a Prepared Food and Beverage Tax and a Room Occupancy Tax), Cary's Occupancy tax was withdrawn and replaced with the new County-wide taxes. To compensate the Town for the lost revenue, a percentage of the revenue from the Occupancy Tax (5%) was designated for Cary. In addition, Cary (as well as all other Wake municipalities), was given the opportunity to apply for a portion of both the Food and Beverage and Occupancy taxes.

As Cary has grown, it has become a greater contributor to the Food and Beverage and Room Occupancy taxes in two ways. First, our citizens pay taxes for their prepared food and beverages. Second, our citizens have paid for large recreation venues (and supporting infrastructure such as roads, water and sewer) that welcome thousands of visitors each year, filling both our hotels and our restaurants. We are pleased to showcase Cary and offer our wonderful amenities to others from around the Country. However, as we establish ourselves as a leader in amateur sports, we also recognize the growing inequity in the distribution of revenue from both the Food and Beverage and Occupancy taxes.

This a snapshot of the contribution that Cary and Morrisville each have in the generation of revenue for the taxes:

Food and Beverage Tax

July 2007 - February 2008 = $10,567,324

Cary's portion = $1,868,033 or 18% of the total collected

Morrisville portion = $266,785 or 3% of the total collected

Occupancy Tax

July 2007 - March 2008 = $10,733,492

Cary's portion = $2,496,684 or 23% of the total collected

Morrisville portion = $1,839,616 or 17% of the total collected

Because the Town of Morrisville also contributes a significant portion to the taxes, it may want to work with us in having the distribution formula redefined. I hope that the Town of Cary and our fellow leaders in our region can work out an agreement in which distribution is more accurately based on the point of generation of revenue.

Cary has the opportunity to expand upon our success and add more venues that have regional as well as national draw. Having a revenue stream that correlates with our citizens' and business owners' contribution to the Prepared Food and Beverage and Occupancy tax revenue will enable us to pursue these venues.

Thank you for your consideration.

Sincerely,

Jennifer

Jennifer B. Robinson

Cary Town Council

District A